This article was first published in The Conveyor, a publication of the California Construction and Industrial Materials Association.

Mining companies are subject to myriad requirements under the Surface Mining and Reclamation Act (SMARA) and implementing regulations that can trip up even the most diligent of operators from time to time. When a potential violation occurs, SMARA holds that either the lead agency or the Department of Conservation (read OMR) may initiate enforcement proceedings by issuing a notice of violation (NOV). All too often, the process results in an order to comply issued against the operator, which in turn can jeopardize the operator’s AB 3098 List eligibility. Removal from the AB 3098 List forecloses an operator’s ability to sell materials to State and/or local agencies, often a major component of many operators’ customer bases.

Enter SB 447. Under this new CalCIMA-driven legislation operators can maintain AB 3098 List eligibility while working to resolve enforcement issues required by an order to comply, and may now also negotiate the terms of, and stipulate to, such an order. These are called stipulated orders to comply.

How SB 447 Works

SMARA provides that either the lead agency or OMR can issue an NOV to an operator. Notwithstanding the NOV, the operator has the right to a hearing before the lead agency (e.g., the SMGB, or local board of supervisors or city council) prior to enforcement. Unless the operator wins at the hearing, the agency will issue an order to comply. SB 447 now holds that the operator does not lose AB 3098 List eligibility from issuance of an order so long as it is working to comply with it.

In addition, under SB 447, an operator can now enter into a stipulated order to comply rather than taking its chances at a hearing. Under this new option, when OMR issues the NOV, OMR, the local lead agency, and the applicant must all stipulate to the order. By contrast, and as a nod to SMARA’s home rule philosophy, when the local lead agency issues the NOV, OMR does not stipulate to the order (though it must receive notice). Under the latter situation, an operator would be wise to remind the local agency which parties are, and are not, involved in the negotiation and execution of the stipulated order.

Note that SB 447 only comes into play at the compliance order stage. There are no protections afforded by SB 447 at the NOV stage because AB 3098 List eligibility is not jeopardized by only an NOV. Also, the fact that a compliance order is required means that the operator will need to commit to some kind of compliance efforts (possibly even penalties). Yet this result may be palatable given the upside of retaining AB 3098 List eligibility, depending on how the operator can negotiate favorable terms in the order, including minimizing or reducing actual penalties. Of course, fighting the NOV outright at a public hearing may, in some cases, be warranted.

A less conspicuous provision of SB 447 requires that a local lead agency be notified of a violation for 30 days (the former rule was 15 days) without taking steps to remediate the violation before OMR may initiate enforcement.
Going Forward

SB 447 is a significant new tool that allows operators to maintain their AB 3098 List eligibility, no matter the circumstances, through compliance with an order to comply, which may be stipulated to through negotiation with the lead agency and/or OMR. It is incumbent upon operators to use SB 447 to simultaneously obtain favorable terms from the enforcing agencies and maintain the ability to sell to State and local agency customers. Of note, SB 447 contains a sunset provision that was added through negotiations with various stakeholders. Specifically, SB 447 is set to expire on January 1, 2019, meaning that under current statute, any stipulated compliance orders must be issued no later than December 31, 2018.
_______

Kerry Shapiro is a partner at Jeffer Mangels Butler & Mitchell LLP, and has represented the mining and building materials industry on government, land use, environmental, and public land matters for 25 years. He has extensive experience working with SMARA, CEQA, the Mining Law of 1872, NEPA, the Endangered Species Act, FLPMA, the Mineral Materials Act, and other public land and environmental laws. Kerry also serves as General Counsel to the California Construction and Industrial Materials Association (CalCIMA), and has worked on a number of important legislative reforms for the building materials industry. Contact Kerry at KShapiro@JMBM.com or 415.984.9612.

Kerry Shapirois the Chair of JMBM's Natural Resources and Mining Group and co-chairs its Construction and Building Materials Group. Kerry serves as General Counsel to the California Construction and Industrial Materials Association (CalCIMA), and chairs the association's Legal Action Committee. He has represented the mining industry on mineral extraction and land development projects for over 25 years, providing legal services on government, land use, environment, and natural resources matters, at federal, state, and local levels. His experience includes securing entitlements for the largest federally-approved sand and gravel project in the United States, obtaining the first vested rights confirmation from the California State Mining and Geology Board for the largest aggregate deposit in California, and successfully representing mining companies before the Ninth Circuit Court of Appeals and state courts of appeals on mining, CEQA and federal endangered species matters. Contact Kerry at 415.984.9612 or KShapiro@jmbm.com.

Martin StratteMartin Stratte is a land use and environmental attorney who assists with the entitlement of complex projects throughout California in accordance with CEQA, NEPA, and California's greenhouse gas emission and climate change regulations. He also represents clients in related litigation. Contact Martin at MStratte@jmbm.com or 415.984.9627.

Jordi Venturais a member of JMBM's Natural Resources and Mining Group. His practice focuses on the representation of mining companies in Latin America, where he has conducted effective mining legal diagnoses and effective diagnoses of social licenses to operate. He represents the mining industry in mining leases, joint venture and operating agreements, option agreements, exploration and development agreements, and mine operating contracts. He has been the lead attorney in mergers and acquisitions, divestitures of business entities and other land transactions. Jordi Ventura is licensed to practice in Utah and Colorado; he is not licensed in California. Contact Jordi at JVentura@jmbm.com or 415.984.9689.